names of Dodge and Smith has been at all times known to a majority in interest of the defendant's stockholders, and to all of its directors. By whose particular authority, unless it be that assumed by Dodge and Smith themselves, the stock was placed in their names, is not disclosed.

At the annual meeting of the stockholders in 1905, and at each annual meeting since, "all acts, matters, and things entered into and performed by the officers and directors" have been by unanimous vote, "fully and in all respects ratified, confirmed, and approved." Some of the persons who at different times owned the stock which the plaintiff now owns were present at various ones of these annual meetings. But what knowledge they had of the fact that Dodge and Smith held the New Jersey corporation stock is not made to appear, nor is it shown that information was possessed by the minority stockholders in general. The annual balance sheets since 1908, if accessible to the stockholders, or made known to them, would have indicated to them that the defendant had full title to the stock.

The plaintiff never owned any shares in the defendant prior to September, 1912, and there has been no assent by him or by his predecessors in title to the retention of the stock in the names of Dodge and Smith, except such, if any, as has been shown by the foregoing statement.

There has been no dissipation of the assets of the defendant corporation, unless the retention of the title to the stock by Dodge and Smith be regarded as such a dissipation. The dividends on the stock of the New Jersey corporation held by Dodge and Smith are paid directly to them when declared, and by them paid forthwith to the defendant.

The purposes and powers of the defendant corporation, as stated in its certificate of organization, embrace the doing of many kinds of business other than the holding and owning of shares of the capital stock of other corporations. But so far as the record shows it has never attempted to exercise any of those additional powers. Its entire assets consist of the shares of capital stock of the New Jersey corporation and of the New York corporation, and claims for money loaned to those corporations. It is therefore, so far as any of the rights here involved are concerned, a mere holding corporation, and it is to be treated as such.

From these agreed facts we draw certain conclusions of fact, and state them now without regard to their effect upon the rights of the parties. We think that it must be held that the stock was placed and

still remains in the name of Dodge and Smith with the acquiescence and tacit approval of the board of directors. Directors of a corporation must act as a board, but it is not necessary that their action be Peirce v. formal or their votes recorded. Morse-Oliver Bldg. Co. 94 Me. 406, 47 Atl. 914. It may be sufficient as to third parties, if they establish a mutual understanding. York v. Mathis, 103 Me. 67, 68 Atl.

Their action or their mutual under746. standing may be shown by circumstances or conduct. Cases just cited. When it appears, as it does in this case, that for nine years all the directors have been conversant with the fact that two of their number hold in their names the record title to more than one half of the assets of the corporation, and have made no objection, it certainly affords very strong evidence of their mutual understanding and unanimous assent.

While it

In the next place we must find that there has been no ratification of the acts of the directors, if any was necessary, by the stockholders. The fact that a majority in interest of the stockholders knew of the situation and approved it has no legal significance. Stockholders can act only as a body, and in meeting assembled. is undoubtedly competent for the stockholders to ratify unauthorized acts of di-, rectors, which are within the corporate powers, he who relies upon a ratification has the burden of showing that attempted ratification really ratified. Neither individuals, nor stockholders in a body, can be said to ratify acts of which they have no knowledge. The resolutions of ratification were sweeping. They referred to no particular act. It does not appear that the stockholders generally, outside of the directors, had any knowledge that the directors had authorized the New Jersey stock to be put into the names of Dodge and Smith. It does not appear that this was known to the stockholders then holding the stock now owned by the plaintiff. Such a ratification is ineffective because it really does not ratify. It is a paper ratification, not a real one. A decent respect for the rights of stockholders, especially of minority stockholders, should require that he who seeks to bind them by votes of ratification should show that the stockholders generally knew specifically what they were voting about. Camden Land Co. v. Lewis, 101 Me. 78, 63 Atl. 523.

Again, we find that Dodge and Smith Whether have no interest in the stock. they are even naked trustees is left uncertain. They have signed transfers of the stock certificates in blank, and have put them into the defendant's vault. Whether

they have delivered them to the defendant in such way as to devest themselves of any actual control of them is not clear. But we think it is immaterial. The stock in fact belongs to the defendant. The certificates of stock are in the physical possession of the defendant. As sole owner in fact it has the undoubted right to reduce them to its legal possession, fill out the blank transfers, and present them to the proper officer of the New Jersey corporation to be transferred of record to itself. And that is what the plaintiff seeks to have it compelled to do.

Several defenses are offered: (1) That the complainant has not sufficiently attempted to obtain redress by application to the directors or to the corporation itself; (2) that the defendant corporation has duly ratified the holding of the New Jersey corporation stock by Dodge and Smith; (3) that the complainant cannot complain, because if any wrong was done, it was done long before he became a stockholder; (4) that the holding was approved by his predecessors in title; (5) that a transfer on the books of the New Jersey corporation should not be required in a suit to which that corporation is not a party; (6) that the alleged uncertainty of the law of New Jersey with respect to the susceptibility of stock in any New Jersey corporation to be transferred to and held by a foreign corporation was an adequate reason for having the shares of the New Jersey corporation stand, of record, in the names of individuals, rather than in the name of the defendant; and (7) that the defendant corporation has the right, with the approval of its directors and a majority of its stockholders, irrespective of any question about the law of New Jersey, to have individuals hold the record title to this stock.

I. It is a wise rule of procedure which requires that aggrieved stockholders seeking remedies for corporate wrongs should first make application for relief through corporate channels, or allege and prove sufficient reasons why such applications would be ineffectual. Ulmer v. Maine Real Estate Co. 93 Me. 324, 45 Atl. 40; Trask v. Chase, 107 Me. 137, 77 Atl. 698. They must apply to the directors or the corporation before they apply to the court, unless it appears from the bill and proof that such application would be useless. But the law requires in this respect no useless formality. The plaintiff in his bill alleges that he has made no application to the directors or corporation, for the reason that such application would be futile. And we are of opinion that his apprehension is well founded. The policy pursued by the directors and the majority interests controlling

the defendant corporation is deliberate and of long standing. And whatever the motives for it may be, there is not the slightest reason to be drawn from the history of the corporation, to think that the policy would be abandoned at the request or demand of a minority stockholder, but rather the contrary. This point in defense is not tenable.

II. The matter of ratification by stockholders' vote has already been discussed in part. We will add that if it should turn cut, as claimed by the plaintiff, that the act of the directors in keeping the stock in the names of private individuals, though they were possessed by by-law with full corporate powers, was ultra vires the corporation, or if it should appear that the act was in manifest disregard of the duties of the corporation to its stockholders, and of the legal rights of minority stockholders, the ratification must, from the nature of things, be nugatory. In fact, there was no such ratification as should be held to bind nonassenting stockholders with regard to unauthorized acts of the directors not known, or made known, to the body of the stockholders.

The matter of ratification, however, is not very important. For if the act of the directors was ultra vires the corporation, as the plaintiff claims, ratification would not help it. And if, as the defendant claims, the act was ultra vires and proper, ratification was unnecessary.

III. The third objection is that the plaintiff cannot complain because the wrong, if any, was done before the plaintiff became a stockholder. One answer to this, and a sufficient one, is that the wrong is a continuing one. If there was a wrong before the plaintiff became a stockholder, it is no less a wrong since. It is an existing condition, alleged to be a corporate wrong, that he complains of. This point is not sustainable.

IV. The claim that the holding of the stock by Dodge and Smith was assented to and approved by the plaintiff's predecessor in title does not appear to be true in fact. At least it is not shown. Whether his predecessors were among those stockholders who knew of it does not appear.

V. We think the New Jersey corporation is not a necessary party to this suit. As a corporation, it can have no interest in the ownership of its own capital stock. The New Jersey corporation is not asked to do anything. The bill assumes that its officers will, upon request, and as a matter of customary business, transfer the title of record of the Dodge and Smith stock to the defendant, who is the owner.

VI. The defendant contends that it was

proper, as a matter of business policy, for it to allow the record title to the New Jersey stock to remain in the names of Dodge and Smith, on account of the doubts expressed as to whether, under the laws of New Jersey, stock in a New Jersey corporation can legally be held by a corporation of another state. This point is material, because if it cannot be done, it would be futile to grant the plaintiff's prayer and direct the defendant to try to have it done. If such were the case, it might be that the promoters of the defendant corporation would find it expedient to adopt some other method by which they could adjust themselves to the law. But we think there is no considerable doubt with respect to the law of New Jersey.

stock of

.

We do not propose to discuss the law of New Jersey at length. It is settled law generally that one corporation cannot hold the capital stock of another corporation without legislative authority. But it appears from the cases cited from the New Jersey courts that, by statute in that state, "any corporation may purchase, hold, sell, assign, transfer, mortgage, pledge or other wise dispose of the shares of the capital any corporation of this or any other state, and while owner of such stock may exercise all the rights, powers and privileges of ownership, including the right to vote thereon." Under this statute there is no doubt that a New Jersey corporation can hold stock in a Maine corporation. But here the question is, Can a Maine corporation hold stock in a New Jersey corporation? Will the New Jersey law permit it? The case of Warren v. Pim, 66 N. J. Eq. 353, 59 Atl. 773 (1904), which has been discussed by counsel, is somewhat illuminating, but by no means decisive. The question in that case was not whether a corporation created by another state could own and hold shares in a New Jersey corporation, but whether an English corporation or association, organized purely as a voting trust, and having no beneficial ownership of the shares them selves, could so own and hold. The question was answered in the negative, but for reasons in no one of which did the majority of the court concur. The opinions of the justices are interesting, however, in this connection, inasmuch as they show the tendency of judicial thinking, though the expressions touching the power of a corporation of another state to hold stock in a New Jersey corporation are mere dicta. Chancellor Pitney, now Mr. Justice Pitney, said that he could find nothing in the New Jersey statute that satisfied him that any discrimination was intended to be made against alien or foreign corporations, either

as to their ownership of such stock, or as to their right to vote upon it. Other jus tices expressed similar views. One intimated that the corporations of a sister state, whose laws permitted them the right to hold stock in the corporations of another state, might invoke the doctrine of comity to support them in exercising a similar right in New Jersey corporations. Some of the justices expressed no opinion on this question, as it was not in issue. No one advised that the power did not exist. In State v. Atlantic City & S. R. Co. 77 N. J. L. 465, 72 Atl. 111 (1909), which was an information in the nature of quo warranto, the question was whether a New Jersey railroad corporation could buy and hold the capital stock of another New Jersey railroad corporation. The power of a corporation of another state to hold stock in a New Jersey corporation was not involved. But Chancellor Pitney, speaking for the court, took occasion to refer to the case of Warren v. Pim, and to make the cautionary observation that a majority of the court had not agreed upon any legal proposition involved in that case. It is not improper to add that the question before us was not involved in that case.

But in Denver City Waterworks Co. v. American Waterworks Co. 82 N. J. Eq. 365, 88 Atl. 1053 (1913), we get a little clearer light. The plaintiff, a Colorado corporation, held stock in the defendant, a New Jersey corporation, which was insolvent, and began proceedings to wind up the affairs of the defendant. Later it applied to the court to direct the receiver to discontinue a certain suit commenced by him. Objection was made that the plaintiff had no interest to protect, was a mere volunteer, and had no right to invoke the judgment of the court. Howell, V. C., said: "I think it sufficiently appears that the complainant is still the owner or holder of shares of stock in the defendant, the American Waterworks Company, and, if so, there can be no question of its right to prosecute this matter." Denver City Waterworks Co. v. American Waterworks Co. 81 N. J. Eq. 139, 85 Atl. 826.

The court of errors, on the appeal from the vice chancellor's decree, said: "The decree appealed from will be affirmed for the reasons stated in the opinion filed below by Vice Chancellor Howell." Denver City Waterworks Co. v. American Waterworks Co. supra.

Here it seems to us is a distinct recognition of the power of a corporation of another state to hold capital stock in a New Jersey corporation. It is true the question was not debated. It seems to have been assumed. If the corporation of another